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TD Ameritrade Chief Strategist On Facebook: Options Volatility Suggests A 6.25% Move After Earnings

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Speaking to Benzinga, TD Ameritrade Chief Strategist JJ Kinahan noted that the activity in options on Facebook Inc (NASDAQ: FB) demonstrates that both long and short sides are being played by traders.

Kinahan added that Facebook is often among the firm’s top ten most heavily traded stocks and that, as of Wednesday, Facebook’s implied volatility is “only at the 39th percentile for the year.”

The implied volatility indicated that the stock is on the low end of its historical volatility, in harmony with its 6-month trading range of $70 to $82.

The Calls and Puts were “trading at about three times” the normal activity, which Kinahan said “makes sense on a day when you have [an] earnings” release coming up.

Related Link: SunTrust: Facebook Q4 Will Be Strong

The volatility priced into the options suggested an expected 6.25 percent move (up or down) in the stock after the earnings announcement, according to Kinahan.

Where Kinahan had seen significant activity in weekly Call options on Facebook was at the February $80 strike price.

The probability that the $80 level will be touched by Friday is about 66 percent.

On the Put side for weekly options, based on open interest, there appears to be activity near the $74 strike price with a 63 percent probability that the stock will touch that level by Friday, Kinahan said.


Kevin Riley and Brianna Valleskey contributed to this report.

Latest Ratings for FB

DateFirmActionFromTo
Nov 2016Wells FargoMaintainsOutperform
Nov 2016BTIG ResearchDowngradesBuyNeutral
Nov 2016Cantor FitzgeraldMaintainsBuy

View More Analyst Ratings for FB
View the Latest Analyst Ratings

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